BRADENTON, Fla. - Tennessee said it earned a record low interest rate on the recent sale of $366 million of general obligation bonds.
The transaction was issued in three series. Closing was Thursday.
The result was a combined true interest cost of 2.16%, according to state Comptroller Justin Wilson.
"Tennesseans are benefiting from the lowest interest rates in state history. It's good to be a triple, triple-A state," he said.
S&P Global Ratings upgraded the state's GOs to AAA in May. The bonds have been rated triple-A by Fitch Ratings and Moody's Investors Service since 2010, when both agencies recalibrated their muni ratings.
Wilson said the deal, which priced July 27 by negotiation, received low rates due to its high credit ratings and favorable market conditions.
The offering was structured as $175.86 million of tax exempt bonds, $124.9 million of refunding bonds, and $65.38 million of taxable bonds.
The $175.86 million of new money bonds priced to yield 0.54% with a 5% coupon in 2018, to 1.6% with a 5% coupon in 2027, to 2.05% with a 5% coupon in 2036.
Spreads to the benchmark ranged from zero basis points in 2018, 8 basis points in 2027, and 4 basis points in 2036, according to Thomson Reuters.
The proceeds will be used to fund capital projects.
The 15-year refunding generated net present value savings of $22.8 million or 11.7% of the refunded par.
The state's financial advisor is Public Financial Management Inc.
Citi was the book-runner for the sale. Co-managers were Bank of America Merrill Lynch, Morgan Stanley, and Wells Fargo Securities.
Bond counsel was Hawkins, Delafield & Wood LLP. Bass, Berry & Sims PLC was counsel to the underwriters.